Your Self-Directed IRA can be a ticket for all sorts of alternative asset classes. Think real estate, precious metals, private companies, and even tax liens. And that’s great! That’s what many investors want with their Self-Directed IRA—a way to invest in their retirement that doesn’t always follow the beaten path. But maybe you do want to invest in traditional stocks and bonds using a traditional brokerage account—you just want to do so on your own terms. How can you use a Self-Directed IRA to trade public stocks? Here’s everything you’ll need to know.

Understanding Self-Directed IRAs for Public Stocks

Self-Directed IRAs offer flexibility and control when it comes to investing for retirement. But what happens when you don’t want the flexibility of alternative asset classes and just want to invest in publicly listed stocks? You’ll work through a traditional brokerage—while maintaining a relationship with your Self-Directed IRA administration firm. The process is straightforward, but there are some important guidelines and considerations to keep in mind.

Custodian Requirements

When investing in public stocks through a Self-Directed IRA, you’ll still need a custodian to oversee the account. The custodian can be a bank, credit union, trust company, or another IRS-approved entity. They’ll handle administrative tasks and ensure that your transactions comply with IRS regulations. And once you have an IRA set up at a Self-Directed IRA administration firm, you’re ready to move to the next step.

Choosing a Brokerage

While a Self-Directed IRA allows you to choose your investments, it doesn’t mean you can bypass a brokerage altogether. You’ll still need a brokerage account within your Self-Directed IRA to execute trades. However, not all brokerages support Self-Directed IRAs, so it’s essential to find one that does. Here at American IRA, we do offer one—which gives you all sorts of freedom to invest on your terms.

Investment Options Once You’ve Started

With a Self-Directed IRA, you have access to a wide range of public stocks. You can invest in individual companies, index funds, exchange-traded funds (ETFs), mutual funds, and more. You’ll be free to build a retirement account that focuses on your preferences, experience, and risk strategy. And you can do it very easily once you have an account with a Self-Directed IRA administration firm.

One of the significant benefits of using a Self-Directed IRA for public stocks? The tax advantages it offers. Any earnings generated within the account are tax-deferred or, in the case of a Self-Directed Roth IRA, potentially tax-free. This can lead to long-term savings compared to taxable brokerage accounts, giving you more rein to invest as you like.